Is the debate over data and online privacy misguided?

Consumers have long been trading their personal data in return for access to Web sites like Facebook. The tradeoff has worked well for both companies and consumers but, as the pool of data grows bigger, so have concerns over privacy.

(c) 2012 Pinar Ozger. pinar@pinarozger.com

Politicians and the media have been quick to tout ideas like “opt-out” or “do-not-track” but, according to companies that depend on data, these so-called solutions are misguided and could compromise future innovation.

Ashlie Beringer, partner at Gibson, Dunn & Crutcher LLP, is an attorney who has represented companies like Facebook and Flurry in class actions and regulatory investigations over privacy. She believes there is a disconnect between the political rhetoric over privacy and what companies are actually doing with consumer data.

“The conversation is misinformed and driven by a misunderstanding of the value proposition,” said Beringer, speaking at GigaOM’s Structure:Data conference on Thursday.

Jim Benedetto, the CTO of data-provider Gravity and a former MySpace executive, shared her view that the current privacy debate has been guided by politics rather than practice.

But he says companies can do three things to ease consumer concerns and get on top of the debate: provide full transparency to their users; give users full control; ensure the data-for-access exchange provides consumers with real value.

This solution may be hard to implement, though, given that many consumers and politicians lack even a basic understanding of how companies and advertisers use data.

There is also the question of who should own which types of data. While individual profiles may belong to consumers, companies can argue that they own analytic insights based on such profiles.

A final feature of the current privacy debate is that attitudes to data and privacy are vast-evolving. While attaching a photo to an online personal profile was unsettling a decade ago, many people don’t think twice about doing so today.

Companies hope that consumers’ attitudes to data and advertising will evolve in a similar fashion. Their challenge is to educate them before privacy fears gain more traction.